international trade

This is encouraging. A Canadian signature on the TPP agreement is important at this stage.

The federal government has confirmed it intends to sign the controversial Trans-Pacific Partnership trade deal at a meeting next week in New Zealand. But International Trade Minister Chrystia Freeland said Monday signing the treaty doesn’t necessarily mean Canada will ratify it.

Negotiations to conclude the Trans Pacific Partnership (TPP) Trade Agreement wrapped up on October 5, 2015. Given that this was in the middle of the Canadian election campaign I suppose it is not a big surprise that the TPP has gained somewhat of a more of a partisan political profile than perhaps otherwise would have been the case.

But at first glance, it is a bit hard to understand. The Canada Europe Trade Agreement (CETA), the other big trade agreement of the Conservative era, has broad support, including from the Liberal government. And while they were always a bit wishy washy on the subject, during the election campaign the Trudeau Liberals said they were open to international trade.

Indeed, the new Liberal Trade Minister, Chrystia Freeland, has written on the subject and suggests that trade is key to prosperity to the middle class. The extract below is from a recent Globe and Mail story.

In 2012, just one year before she entered politics, Freeland published a book that looked at the gap between the world’s richest and poorest people, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. When she was first elected as an MP in a 2013 by-election in a Toronto riding, she made the battle against income inequality and the hollowing out of the middle-class her cause célèbre.

Those positions may underpin her tenure in the trade portfolio. She has argued that free trade is a necessary step to improving middle class prosperity in Canada.

“Canada is a small country. The world economy is huge. And if we want our middle class to be prosperous — which is the core of our agenda — having trade deals with the world is absolutely essential,” she said in August 2014.

And earlier this year, writing in this newspaper, she warned that “anti-globalization and opposition to trade” are the wrong policy responses to helping the middle class.

(Globe and Mail, November 4, 2015. Drew Hasselback)

So you would think that with this kind of perspective, Minister Freeland’s position on the TPP would be clear. However, it is not… and as a result there is a distinct lack of clarity about what the Liberal Government will do with the TPP.

Start with the instructions from the top. The “mandate letter” given to Minister Freeland by Prime Minister Trudeau instructs her as follows:

With these instructions in hand she has dutifully quietly launched “consultations with Canadians” on the TPP which, it must be said, seem to ignore, or at least duplicate, the wide ranging consultations that her department did before and during the negotiations. And she seems to be taking a tabula rasa approach when back in December she said that it was “not my job right now to persuade anybody TPP is good”.

At times she even leaves the impression that she doesn’t accept certain aspects of the agreement. Finally stating that while she understands that the TPP negotiations cannot be reopened for anything the Liberal government might want to change, she has allowed it to be mooted that Canada should/could/might seek some additional “side agreements” to clarify Canada’s approach to some issues (she has been silent on what areas these might be and it is not clear any of our international partners would take us up on the idea at this stage).

The Minister has also indicated that the government may even hold Parliamentary Hearings on the TPP in the spring to continue the consultation process.

It is hard to explain the hesitation, particularly when the government has set in motion the machinery to try to get the CETA implemented.

She has lots of support to get on with it. The Canadian business community, the group that would typically be seen as a Trade Minister’s principle constituency, is solidly behind the deal. They have been quietly recently, but their press release in the fall was unequivocal:

Canadian companies depend on trade to expand their markets, create jobs and bring consumers more choice and better prices, which is why Canada has always been at the forefront of global trade cooperation. The TPP is the most important agreement of its kind in over 20 years and would position Canadian companies to compete on a level playing field in the world’s fastest growing region for generations to come.

We strongly believe that a high standard and comprehensive TPP covering 800 million people and 40 per cent of the world economy will open new opportunities for Canadians. It will also build on the hard-fought advantages Canada has secured in past trade agreements with the United States, Mexico and Europe

(Canadian Manufacturers and Exporters Press Release: October 1, 2015)

The views of organized labour and some civil society groups are against the agreement. These views must certainly be heard and considered by any government. However, having had essentially the same position on all of Canada’s previous trade agreements and demonstrating a “Chicken Little” track record in this area, they cannot be considered determinative.

There are a couple of other explanations that might help explain Minister Freeland’s reluctance to move too quickly on this file.

In order to take effect the TPP must be ratified by signatories’ individual parliaments. It must be approved by six countries, as a minimum, and these countries must represent a minimum of 60 per cent of the GDP of the 12 members. In effect, that means that either Japan or the US must sign before it can come into force. With the US election season upon us, it may be some time (perhaps the lame duck session in the fall?) before we know how they will dispose of the TPP. It is never smart to get too far out in front of the US on anything, particularly trade. The Minister may simply be wise to keep Canada’s final decision to herself for now.

Less charitably, however, it may also be that Minister Freeland, like her Prime Minister and some of her other colleagues, is not yet in governance mode. There have been other examples where the members of the new Liberal government seem to prefer the easier work of photo ops, selfies and glad-handing to actually taking a position on difficult issues. Particularly on an issue that has their political opponent’s fingerprints all over it…perhaps it is easier to be in election mode.

While the Minister consults, the TPP process continues to move forward. Questions are now being asked whether Canada will participate in a possible TPP event upcoming in New Zealand which, it is reported, will see a number of countries “sign” the agreement. Signature is a long way from ratification, but you can’t ratify if you haven’t signed. The Minister did nothing to clarify Canada’s position when she has stated that

“Canada is a long way from signing the agreement and no decision has been made as to attendance at the New Zealand meeting.

(CBC News website, January 14, 2016)

While it is not clear how many countries will be ready to sign at this time, the fact that Canada is still consulting and may not show up to the meeting if it takes place, means that new questions and doubts will be raised about Canadian intentions. This cannot be reassuring to either the Canadian international business community or to our international partners.

The Minister has had opportunities recently to meet with a number of her colleagues from other TPP countries. It is hard to imagine the subject of Canada’s next steps not coming up. But there has been no additional clarity provided. For now, we have to take the Minister at her word… that she is engaged in a legitimate consultation… and we must wait on that process to run its course.

Except that I would have expected more from such a knowledgeable individual who, by her writing, has demonstrated she well understands the importance of international trade to Canada.

It is not often that one story touches on two of my passions…Canadian wine…and international trade policy. This is one of the many reasons that the Government of Canada needs to ensure ratification of the Trans Pacific Partnership trade agreement. It became a hot potato during the last election campaign, but with the need for rhetoric past, our new Canadian Ministers should be paying attention to stories like this.

_______________________

Ice wine is in many ways the origins of the Canadian wine industry. New protections in global trade deals show how the industry and its candied vintages have come of age